Helpful reasons for judgement were released today by the BC Supreme Court, Vancouver Registry, awarding a Plaintiff full costs and disbursements despite a split of liability.
In today’s case (Ekman v. Cook) the Plaintiff suffered serious injuries in a collision for which fault was disputed. Liability and quantum were severed and at the liability trial the Court found that the Plaintiff was 75% responsible for the crash with the Defendant bearing the balance of blame.
The parties eventually settled for $135,000 plus taxable costs and disbursements but then could not agree on what these were. ICBC argued the Plaintiff is only entitled to 25% of these on the basis of the liability split. Mr. Justice Weatherill disagreed and in awarding full costs to the Plaintiff provided the following reasons:
 Section 3(1) of the Negligence Act, R.S.B.C. 1996, c. 333, sets out what is often referred to as the “usual rule.” It provides as follows:
3 (1) Unless the court otherwise directs, the liability for costs of the parties to every action is in the same proportion as their respective liability to make good the damage or loss….
28] In my view, an award to the plaintiff of only 25 percent of his taxable costs and disbursements in this case will result in an injustice. The defendants forced the plaintiff to trial and to have to incur 100 percent of those costs and disbursements in order to obtain any relief whatsoever.
 An award of only 25 percent of the plaintiff’s costs when 100 percent of his costs were required to be incurred to achieve the result that he did would have a profound effect on his overall recovery. In my view, it is appropriate that the defendants be liable to pay those costs.
 Here, the plaintiff achieved substantial success, that, as I have said, would be defeated if costs were awarded in accordance with the usual rule.
 Accordingly, I am exercising my discretion in favour of the plaintiff, and I am awarding him 100 percent of his taxable costs and disbursements in this matter.
 Had the plaintiff taken the position that he was not contributorily negligent to a significant degree, or had the defendants conceded the possibility of some negligence on their part, it is possible that I would have exercised my discretion in a different fashion. The plaintiff is entitled to his costs of this application.
 I do want to thank both counsel for their very thorough and helpful submissions.
Reasons for judgement were released last week by the BC Supreme Court, Vancouver Registry, addressing costs consequences following a trial where ICBC marginally beat their pre-trial settlement offer.
In last week’s case (Wattar v. Lu) the Plaintiff was injured in a collision in which she and the Defendant were found equally at fault. After the liability split the Plaintiff’s net damages awarded at trial came to $26,000. Prior to trial ICBC made a formal offer of $27,500. ICBC applied for costs consequences to flow from the Plaintiff’s choice to proceed to trial. Mr. Justice Smith exercised his discretion and refused to award such consequences noting that the unrecovered potion of damages due to the operation of the Negligence Act was punishment enough. The Court provided the following comments:  This was a three-day trial. In the absence of an offer to settle, the plaintiff would have been entitled to half of her costs, or $5,500, to reflect the division of liability. That would include $2,250, representing half of the costs attributable to three days of trial ($1,500 times three, divided by two). That is the proper amount by which to reduce the plaintiff’s costs as a consequence of her refusal to accept the settlement offer.  Counsel for the plaintiff argues that the plaintiff should recover all of her disbursements related to damages because she was substantially successful on that issue, but for the reduction resulting from the liability finding. I cannot accept that argument because the offer clearly encompassed a reasonable assessment of the plaintiff’s damages, discounted for the substantial liability risk. Acceptance of the settlement offer would have made it unnecessary for the plaintiff to prove her damages at trial.  The plaintiff is therefore entitled to costs of $3,250, plus one half of her disbursements to the date of the offer. In view of the modest award and the relatively small gap between the offer and the judgment, I do not consider it appropriate or necessary to further punish the plaintiff with an award of any portion of the defendant’s costs.
Parties to a BC Supreme Court lawsuit can be forced to attend an examination for discovery set up by opposing litigants. Failure to attend can have a variety of consequences. Demonstrating one such consequence in action, reasons for judgement were released this week by the BC Supreme Court, Vancouver Registry, punishing a non-attending part with increased costs.
In the recent case (Stanikzai v. Bola) the Defendant was found 75% at fault for a motor vehicle collision and was ordered to pay damages of just over $189,000. Prior to trial the Defendant failed to appear at an examination for discovery. Mr. Justice Smith found this behaviour was “reprehensible” and ordered that the defendant pay post trial costs at a level greater than they otherwise would have been. In reaching this decision the Court provided the following reasons:  Parties to civil litigation are required by R. 7-2(1) of the Supreme Court Civil Rules, to make themselves available for examinations for discovery. It is not something a litigant can choose to do or not do on the basis of her own convenience. If Ms. Bola was unable to attend the examination on the day it was set, her obligation was to notify her counsel and discuss alternate dates. Instead, she simply failed to show up.  I also find it difficult to believe that she had no knowledge of the false information her husband was apparently providing to defence counsel when a second discovery was requested. Ms. Bola showed a complete and unacceptable disregard for her duties under the law. I stress this was not the fault of defence counsel, who attempted to get her cooperation…  I find that the defendant’s refusal to appear at discovery meets the definition of “reprehensible conduct” and I would not hesitate to award special costs if I thought that conduct had affected the outcome of the trial. But, in the specific circumstances of this case, I find that there is another, more proportionate rebuke available.  Under normal circumstances the plaintiff, having been found 25 per cent responsible for the accident, would recover only 75 per cent of his costs. This arises from s. 3(1) of the Negligence Act, RSBC 1996, c 333: 3 (1) Unless the court otherwise directs, the liability for costs of the parties to every action is in the same proportion as their respective liability to make good the damage or loss.  Although payment of costs in proportion to the degree of liability is the default rule, the court has discretion to depart from it. That departure must be for reasons connected with the case, with the principle consideration being whether application of the usual rule will result in an injustice: Moses v Kim, 2009 BCCA 82 at para 70.  In these circumstances, I find that the interest of justice can best be served by depriving the defendants of the reduction in costs that they would otherwise benefit from and I award the plaintiff the full costs of this action.
Section 3 of BC’s Negligence Act reduces a Plaintiff’s entitlement to costs recovery to the same proportion as a Plaintiff’s degree of fault following a collision. Reasons for judgement were released last month by the BC Supreme Court, Vancouver Registry, addressing the factors a Court can consider in deviating from this typical result and further finding that pre-trial borrowing is irrelevant to the Court’s analysis.
In last month’s case (Gowler v. Ngo) the Plaintiff was injured in two motor vehicle collisions. Following a 13 day trial a Jury found the Plaintiff 50% at fault for the first of the collisions. Damages of $250,000 were assessed and these were cut in half to take the Plaintiff’s degree of fault into consideration. The Plaintiff’s costs for proceeding to trial were over $100,000. Neither party beat their pre-trial settlement offer leaving the Court to apply section 3 of the Negligence Act.
Madam Justice Gray found it would be unfair to strip the Plaintiff of 50% of his costs given their magnitude and instead reduced the Plaintiff’s entitlement by 35%. In doing so the Court provided the following reasons:
The factors to take into account in considering the court’s discretion are discussed in my decision in Moses v. Kim, 2007 BCSC 1820. I will talk about the Court of Appeal decision in a moment, but I will ask that the reasons for judgment, if they are reproduced, will now include paragraph 13 of the Moses v. Kim decision.
 The authorities demonstrate many factors the court has considered in exercising this discretion. Among them are the following:
(a) the seriousness of the plaintiff’s injuries;
(b) the difficulties facing the plaintiff in establishing liability;
(c) the fact that in settlement negotiations the amount offered was substantially below the ultimate amount;
(d) whether the plaintiff was forced to go to trial to obtain recovery;
(e) the costs of getting to trial;
(f) the difficulty and length of the trial;
(g) whether the costs recovery available to the plaintiff, if costs are apportioned according to liability, will bear any reasonable relationship to the party’s costs in obtaining the results achieved;
(h) the positions taken by the parties at trial, in particular whether the positions taken were appropriate and reasonable in the circumstances;
(i) whether the defendants made any settlement offers;
(j) the ultimate result of the trial; and
(k) whether the plaintiff achieved substantial success that would be effectively defeated if costs were awarded pursuant to s. 3(1) of the Negligence Act…
In my view, in this case the most important factors are the costs of proving damages for an injury of this type, the fact that there is a very significant claim for disbursements, and the fact that the amount of the award is $125,000 and the costs claimed are about $104,000.
Mr. Mussio asked me to take into account some borrowing that Mr. Gowler did prior to the trial. In my view, that is not a factor I can take into account, nor can I take into account the legal fees, based on the decision of the Court of Appeal in the Moses v. Kim case.
Looking at all the applicable factors, in my view it would be unjust to award the plaintiff only 50 percent of his costs. That is because his award would be so diluted by the need to pay his disbursements that he would not have a sufficient recovery. However, it is not a case where Mr. Gowler’s damages were so significant as in the Moses case.
Looking at the cases and all the applicable factors, in my view, the appropriate award is that the plaintiff should recover 65 percent of his costs.
As previously discussed, personal injury trials can be risky and expensive. The British Columbia Supreme Court has a so-called ‘loser pays’ system which generally makes the losing side pay the winning side’s costs and disbursements (the hard expenses associated with running a trial such as court filing and expert witness fees). Last month the BC Supreme Court, Victoria Registry, released reasons for judgement demonstrating this reality.
In this recent case (Sartori v. Gates) the Plaintiff was injured in 2005 when a truck owned by his friend accidentally struck him. The Plaintiff sued for damages. As the lawsuit progressed ICBC made a formal settlement offer of $230,000 plus costs and disbursements.
The Plaintiff presented his own formal offer of $600,000 plus costs and disbursements. These offers were rejected and the claim proceeded to trial. Ultimately a jury found the Plaintiff 33.3% at fault for the collision but accepted that he was injured and awarded damages. When all the dust settled, the Plaintiff was awarded $234,000. ICBC argued that since the final result was “within a knife’s edge” of their offer that the Plaintiff should be stripped of his post offer costs and disbursements. This was a significant development because the Plaintiff spent over $120,000 in disbursements while advancing his claim.
Ultimately Mr. Justice Wilson found that this result would not be fair. However, the Court disallowed disbursements associated with one of the Plaintiff’s expert witnesses and further reduced the disbursements the Plaintiff was entitled to by 1/3 to take into account the jury’s finding of fault and section 3 of the Negligence Act. Some quick math reveals this results in about $40,000 of the real costs of advancing the claim not being recovered by the Plaintiff. This large swing highlights the need to consider potential costs consequences when deciding whether to settle an ICBC claim or to proceed to trial.
This recent case is also noteworthy for a few other reasons. ICBC argued that the usual rule of a winner receiving costs should not be followed given how close the settlement offer was to the jury verdict. Mr. Justice Wilson rejected this argument providing the following useful reasons:
The governing principle on the first issue, is R. 14-1(9). The material words of that subrule, on this application, are:
… costs of a proceeding must be awarded to the successful party unless the court otherwise orders.
The onus is on the defendant to persuade me why I should otherwise order….
The plaintiff reminds me that the discretion conferred by the cost rules must be exercised judicially. The parameters of that judicial duty were referred to in Stiles v. B.C. (Workers’ Compensation Board), and iterated consistently thereafter. The court said:
… The discretion must be exercised judicially, i.e. not arbitrarily or capriciously. And, as I have said, it must be exercised consistently with the Rules of Court. But it would be a sorry result if like cases were not decided in like ways with respect to costs. So, by judicial comity, principles have developed which guide the exercise of the discretion of a judge with respect to costs. Those principles should be consistently applied; if a judge declines to apply them, without a reason for doing so, he may be considered to have acted arbitrarily or capriciously and not judicially.
The Rules of Court mentioned in that extract are those cited above. The “principles … developed …” or “purposes”, were referred to in Giles v. Westminster Savings and Credit Union:
The purposes for which costs rules exist must be kept in mind in determining whether appellate intervention is warranted. In addition to indemnifying a successful litigant, those purposes have been described as follows by this Court:
• “[D]eterring frivolous actions or defences”: Houweling Nurseries Ltd. v. Fisons Western Corp. (1988), 37 B.C.L.R. (2d) 2 at 25 (C.A.), leave ref’d,  S.C.C.A. No. 200,  1 S.C.R. ix;
• “[T]o encourage conduct that reduces the duration and expense of litigation and to discourage conduct that has the opposite effect”: Skidmore v. Blackmore (1995), 2 B.C.L.R. (3d) 201 at para. 28 (C.A.);
• “[E]ncouraging litigants to settle whenever possible, thus freeing up judicial resources for other cases”: Bedwell v. McGill, 2008 BCCA 526, 86 B.C.L.R. (4th) 343 at para. 33;
• “[T]o have a winnowing function in the litigation process” by “requir[ing] litigants to make a careful assessment of the strength or lack thereof of their cases at the commencement and throughout the course of the litigation”, and by “discourag[ing] the continuance of doubtful cases or defences”: Catalyst Paper Corporation v. Companhia de Navegaçao Norsul, 2009 BCCA 16, 88 B.C.L.R. (4th) 17 at para. 16.
Giles is also authority for the proposition that the “usual rule” is that costs follow the event…
Here, this plaintiff did succeed. The defendant’s argument is that he did not succeed to the extent of his aspirations. Therefore, goes the argument, the defendant should have the costs of establishing that failure.
In my opinion, that proposition is not a phenomenon contemplated by R. 14?1(14) or Forrest v. Gaidner.
My conclusion on the first issue is that the defendant has not persuaded me that this is a case on which I should otherwise order. The plaintiff is entitled to his costs, subject to the disallowance of one day of trial and disbursements associated with Dr. Hunt’s involvement.
Reasons for judgement were released last week by the BC Supreme Court finding that Rule 14-1(15) provides the court with discretion to award costs to a Defendant following a finding of contributory negligence as against a Plaintiff.
In last week’s case (Brooks-Martin v. Martin) the Plaintiff was involved in a motorcycle collision. At trial she was found 30% at fault with the Defendant bearing 70% of the blame. The Court awarded the Plaintiff 70% of her costs in accordance with the BC Negligence Act. Although not specifically asked to address this issue, the Court went further and found that the Rules of Court permit a costs award to be made against a Plaintiff if they are found contributorily negligent. Mr. Justice Halfyard provided the following reasons:
Section 3 of the Negligence Act directs that the plaintiff shall receive 70% of her costs of this proceeding, from the defendant Martin. But that statute does not entitle the defendant Martin to receive 30% of his costs of the proceeding, from the plaintiff, because he sustained no damage or loss. See Bedwell v. McGill 2008 BCCA 526 at paras. 29-30 and 32.
However, the defendant Martin was successful on the issue of contributory negligence on the part of the plaintiff. In my opinion, the costs entitlement of the plaintiff is defined solely by theNegligence Act. That statute directs that the plaintiff shall recover 70% of her costs of the proceeding from the defendant Martin. It seems to me that the Rules of Court relating to costs should govern the issue of whether the defendant Martin should recover any of his costs from the plaintiff. Rule 14-1(15) reads in part:
(15) The court may award costs
. . .
(b) that relate to some particular application, step or matter in or related to the proceeding . . .
I think that the issue of whether the plaintiff was contributorily negligent is a “matter in or related to the proceeding” under the new rule… I conclude that the court has the discretion to award costs of the contributory negligence issue, to the defendant Martin. I am not suggesting that such costs should be awarded, only that the court has jurisdiction to entertain such an application under the Rules of Court.
How can a Plaintiff who is awarded damages following a personal injury trial end up owing ICBC money? The answer relates to the costs consequences that can be triggered by formal settlement offers. I’ve discussed this topic previously and two sets of reasons for judgement were released this week by the BC Supreme Court further demonstrating this reality.
In the first case (Dempsey v. Oh) the Plaintiff was injured in a bicycle accident when he was struck by the Defendant’s vehicle. In the course of the lawsuit ICBC made a formal settlement offer of $40,000. As trial neared ICBC increased their formal offer to $165,000. The Plaintiff rejected this and proceeded to trial. At trial the Court made some critical findings relating to the Plaintiff’s credibility and awarded damages of just over $20,000.
Following trial ICBC asked for an order pursuant to Rule 9-1(5) that the Plaintiff pay all of the Defendant’s costs following their first formal offer. The Plaintiff objected to such a result arguing that “if he is ordered to pay the defendant’s costs he will end up owing it money“. Mr. Justice Myers rejected this argument and ordered that the Plaintiff pay the Defendant’s post offer costs. In rejecting the Plaintiff’s submission the Court made the following comment “It is not the court’s function to ensure that a plaintiff makes a net recovery from an action when it has ignored a reasonable offer. That would defeat the purpose of the Rule and does not accord with common sense”.
On another note, this case is worth reviewing in full for the Court’s discussion of Rule 14-1(10). The Defendant argued that the Plaintiff should be deprived of his pre-offer costs as there was no sufficient reason to sue in Supreme Court. Mr. Justice Myers rejected this argument finding that when the lawsuit was started the Supreme Court was an appropriate venue. In making this finding the Court provided the following useful reasons:  In part due to the loss of income, this was a more complicated case than Ghelen. This action was commenced approximately six months after the accident. At that point I find it was reasonable for the plaintiff to have commenced the action in this Court because he was reasonably entitled to see the impact of the accident on his prior condition. There is nothing in the rules which imposes a cost penalty on a party who files its suit quickly after its cause of action arises. And, in Reimann v. Aziz, 2007 BCCA 448, the Court of Appeal held that there is no ongoing obligation on a party to assess his action as it progresses in the Supreme Court in order to consider whether it should be moved to Provincial Court.
In the second case released this week (Miller v. Boughton) the Plaintiff was injured in a 2006 collision. She sued for damages and her case went before a jury. The trial lasted 7 days. Prior to trial ICBC made a series of escalating formal settlement offers starting at $22,000 with the final offer made shortly before trial topping out at $62,500.
The Plaintiff rejected these offers and proceeded to trial. The Jury found the Plaintiff 45% at fault for the crash and the Defendant 55% at fault. After taking this split into account the Jury’s award was a modest $3,880. ICBC’s motion for post offer costs and disbursements was granted. After factoring these in the Plaintiff likely ended up owing ICBC a significant amount of money. (UPDATE September 12, 2011 – click here for follow up reasons confirming the Defendant’s costs were assessed at over $42,000)
Cases such as these illustrate the important lesson that formal offers create a “loser pays” system which could result in significant costs swings following trial. When considering ICBC formal settlement offers it is important to keep this in mind when deciding whether to accept the offer or proceed to trial.
If you would like further information or require assistance, please get in touch.
When not writing the BC Injury Law Blog, Erik is the managing partner at MacIsaac & Company, based in Victoria, B.C. He is also involved with combative sports regulatory issues and authors the Combat Sports Law Blog.
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